Abstract: Using detailed information from lobbying reports filed under the Lobbying Disclosure Act, we construct a unique dataset that allows us to identify which firms lobby on Free Trade Agreements (FTAs) negotiated by the United States, their position (in favour or against) and their lobbying effort on the ratification of each trade agreement. Using this dataset, we show that lobbying on FTAs is dominated by large multinational firms, which are in favour of these agreements. On the intensive margin, we exploit exogenous variation across FTAs to show that individual firms put more effort supporting agreements that generate larger potential gains – larger improvements in their access to foreign consumers and suppliers and smaller increases in domestic competition – and that are more likely to be opposed by politicians. To rationalise these findings, we develop a new model of endogenous lobbying on trade agreements. In this model, heterogeneous firms select into trade and choose whether and how much to spend lobbying on the ratification of an FTA, and politicians may be biased in favour of or against the agreement.

Abstract: We provide systematic evidence that lobbying by firms on trade agreements matters for their stock prices. We leverage a unique shock to U.S. trade policy – the unexpected victory of Donald Trump in the 2016 U.S. presidential election, and the de facto U.S. withdrawal from the Trans-Pacific Partnership (TPP). We find that stocks of companies that advocated for TPP underperformed, experiencing a reduction in share prices by 3.15%. Further, firms whose lobbying efforts were prominently covered in online news media and those lobbying on provisions of particular interest to the U.S. faced more pronounced losses.

Abstract: Using monthly data on trade in goods between January 2016 and February 2024, this study assesses the impact of recent shocks on the fragmentation of the global economy, looking in particular at the dynamics of friend-shoring, near-shoring and decoupling between the world’s two largest economies. Results based on gravity model regressions with high-dimensional fixed effects show that trade flows have become more sensitive to geopolitical distance since the start of the war in Ukraine, leading to the first signs of overall trade fragmentation along geopolitical lines, i.e. friend-shoring. Trade in goods between hypothetical East and West blocs has grown 4 per cent slower than intra-bloc trade since the start of the war. On the other hand, we find no evidence of an increased regionalisation of world trade since the shock of the COVID-19 pandemic or the war in Ukraine. Therefore, our results suggest that near-shoring strategies did not have a large impact on world trade. Finally, our results confirm that the increased trade tensions between the world’s two largest economies have significantly reduced their bilateral trade, a trend that has been exacerbated by the geopolitical tensions and uncertainty created by the war in Ukraine. Exploiting the product dimension of the data, we show that this decoupling has been qualitatively different from the alignment of global trade with geopolitical affinities. The latter has been driven by trade in the least complex products, where alternative suppliers are relatively easy to find. The former, by contrast, has taken place across the entire spectrum of product complexity.

Abstract: Trade policy is increasingly deep, covering many regulatory measures such as environmental and labor standards. There are widespread concerns about the role of multinational corporations (MNCs) in shaping these measures. We construct a unique dataset on lobbying on deep trade policies and show that this is indeed dominated by domestic MNCs and affiliates of foreign MNCs. We develop a theoretical model to study the welfare implications of cross-border lobbying on deep trade policies. When policies are set unilaterally, allowing foreign MNCs to lobby can be good or bad for welfare, depending on whether the interests of domestic and foreign firms are in conflict or aligned. In turn, this depends on the type of deep trade policy, whether firms lobby from their home country or through their foreign subsidiaries and, in the latter case, on the type of FDI. We determine the conditions under which trade negotiations can increase (lower) welfare in the presence of cross-border lobbying, by tightening (weakening) regulations.

Abstract: I systematically explore the role of trade unions in the political economy of trade policy, studying both their lobbying expenditures and their campaign contributions. Using detailed information from lobbying reports filed under the Lobbying Disclosure Act, I first show that unions are the main opposing force to the ratification of free trade agreements (FTAs). Unions that are larger and operate in tradable sectors are more likely to lobby against FTAs and to spend more opposing these agreements. I then study union's PAC contributions to political parties. During the last three decades, more than 90% of unions' PAC contributions were directed to Democratic candidates. I show that this has drastically changed since Trump's presidential campaign. Linking data on campaign contributions, lobbying expenditures, and roll-call votes, I find that unions that lobbied against the ratification of FTAs started contributing more to Republican congressmen, benefitting particularly those who have taken an anti-trade stance.